Costs up but wages flat for many Arizona workers

by Jahna Berry - Sept. 15, 2012 10:53 PMThe Republic | azcentral.com

For Arizona workers, the most important economic indicator is the number on their paycheck. And for many, that figure to the right of the dollar sign is small enough, or has shrunk enough, to make living on it a weekly challenge.

Although wage data indicates that Arizonans' overall average pay has risen 15 percent since the recession, that gain is a cruel illusion.

The state's annual median wage did climb between 2007 and 2010, but only because the state hemorrhaged thousands of lower-paying jobs, according to an Arizona State University economist. The median annual wage still remains relatively low at $34,000, compared with some nearby Western states.

And even though the state's unemployment rate has fallen, from a recession-high 10.8 percent to the current 8.3 percent, the improving job market hasn't brought higher wages for existing jobs, and the state's efforts to create higher-paying positions have seen mixed success.

More critically, the superficial 15 percent wage increase doesn't reflect the financial pressures that many Arizona families face, residents say. They clip coupons, stay with relatives while they are on vacation or wonder if they will earn enough to pay off college loans after graduation, often one big repair bill or emergency-room visit away from financial disaster.

Elisa and Brad Bryant of Phoenix voice worries that echo in kitchens across the state.

Brad Bryant's wages have gone up -- the construction superintendent is now working after he was unemployed on and off for about a year.

While Brad, 48, could earn six figures before the recession, his new job pays about $60,000 a year. Elisa, a nurse, earns $70,500.

They know their family is doing better than most. They relied on family to help them pay the bills when Brad wasn't working, and now they can manage on their own.

But the Phoenix couple don't feel well off.

They have a 19-year-old daughter, Danielle, who attends Northern Arizona University, and a 16-year-old, Mariah, who is a junior in high school. They took out loans to help pay for Danielle's tuition, and they pay for Mariah's private-school tuition. That means they clip coupons for most grocery trips and they watch their spending, said Elisa Bryant, 49.

"We are really trying to be careful," Bryant said.

Earning a sustainable wage -- the amount of money a person or family needs to take care of their basic needs -- remains a challenge for the Bryants and hundreds of thousands of others like them.

Living on low wages

An increase in Arizona's median wage of almost $5,500 over four years would seem like a welcome statistic for workers at the lower end of the pay scale. But it was the loss of so many low-paying jobs during the recession that caused the key metric to rise, said ASU economist Lee McPheters.

Between May 2007 and May 2010, during the worst of the economic contraction, Arizona's median wage jumped from $28,640 to $33,040, an increase of 15 percent. The median rose again in 2011 to $34,110. Median pay is the amount at which half of workers earn more and half earn less.

In comparison, the median wages in Nevada, Colorado and Washington state are $32,656, $37,065, $40,144, respectively.

In Arizona, McPheters said, "more below-median jobs were lost than above-median jobs, so that had the effect of pulling the median wage up."

Lower-paying jobs accounted for 60 percent of all Arizona jobs lost between 2007 and 2010, he said, with the state shedding 192,430 below-median wage jobs and about 128,150 above-median wage jobs. The new jobs created since the recession ended followed the same trend, benefiting more highly educated workers.

From May 2010 to May 2011, the first year of the recovery, more jobs were added in above-median-wage occupations, including management, computing, education and health care.

While the statistics may suggest the employment engine is slowly picking up speed, many Arizonans are feeling less than flush because other economic forces are still stuck in low gear.

House prices are rising, but many homeowners owe thousands of dollars more than their homes are worth. There are fewer jobs than there were at the start of the economic downturn, and there is still stiff competition for those jobs.

Meanwhile, the costs of education, health care and fuel have continued to rise.

A recent study commissioned by the Women's Foundation of Southern Arizona, a women's advocacy group, to assess the lowest wage a family could earn in each of Arizona's counties without relying on aid from the government or non-profits shows how hard it is to live on the median wage.

On a bare-bones budget, a single person in metro Phoenix could survive earning $10.19 an hour for a 40-hour week, or $21,195 annually.

However, a family of two adults, a preschooler and a school-age child would need to earn nearly three times that amount. The parents would have to earn $57,907 combined, the study said. A single parent with two young children would have to earn $50,336 to survive without support.

That's $16,000 higher than the current median wage.

A family that managed to survive on those wages would live an austere life. They would not make any debt payments, eat at restaurants or enjoy extracurricular school activities. At home, they would not have cable or Internet service.

The self-sufficient wage includes market-rate child care and employer-sponsored health care, and the cost of owning and maintaining a vehicle.

While some families clearly do survive earning less pay than suggested in the report, it's also likely they live in substandard housing, rely on relatives, use government programs or turn to non-profit groups, such as food banks, said Laura Penny, the foundation's executive director.

What's enough?

Some Arizona workers who earn close to the state's current median wage say they have enough to get by, but there isn't much left over. To stretch their dollars, they have to be savvy shoppers and also need a bit of luck.

Some live with their parents, other relatives or friends. Or they may be fortunate enough to find inexpensive housing. And they keep an eye out for store sales and use programs that help shave commuting costs.

Even thrifty workers say they sometimes struggle financially.

Jessica Gonzalez, 28, a program manager at the Phoenix non-profit Dress for Success who is studying for her master's degree in public administration at Arizona State University, said she needs to watch her budget carefully.

Entry-level workers like her earn $25,000 to $40,000 at non-profits in Phoenix, but that money can get quickly eaten up by rent and commuting from less-expensive suburbs, Gonzalez said. Rents are rising fast in the Valley, which is making it harder for low-income workers to get by. A four-bedroom house in the West Valley costs $1,000 a month to rent, about the same as a two-bedroom house in Phoenix.

Gonzalez recently moved from Tolleson to Phoenix to be closer to work. She lives with her partner and does not have children. But if she were single, she might have to make tough choices, she said.

"I work on a non-profit salary, but I find that I have to balance my budget," Gonzalez said. "I have to be a good consumer."

In another part of the Valley, a family of six finds that their combined annual pay of $60,000 is more than enough to live on, but it can require tough choices.

Minister Steven Harper and his wife, Anita, who works at a before- and after-school care program in the Dysart Unified School District, have four children. The oldest is 18, and the youngest is 2.

"I don't think that I am rich, by any stretch of the imagination, but I have a hard time (believing) that is just barely surviving," said Harper, 49.

Harper acknowledges that there are choices that his family has made that may not be possible for other people. He and his wife homeschool their children. Since he is home during the day, they don't pay for market-rate child care, which could cost hundreds of dollars per month for an infant or toddler. They bought their Surprise home before the housing boom, when prices were lower. They don't eat out often or take extravagant vacations.

"I'm sure my grandparents could tell us, 'You don't know what a hard life is,' " he said. "I was raised on that atmosphere of not having a lot and to use what income you've got. We teach our kids that, too."

Even if some families have learned to live lean, more good-paying jobs would help young workers stay in Arizona, Gonzalez said.

"There are employers here," she said. "But I don't think there is enough skilled labor here. By skilled, I mean college-educated students are leaving to establish themselves in states that can attract this kind of labor."

Statewide effort

State leaders say they are trying to attract higher-wage jobs.

In 2011, Gov. Jan Brewer signed a jobs package that included phased-in tax cuts for businesses and created a new public-private Commerce Authority that uses state and private funds to attract jobs to Arizona.

The year-old authority, chaired by Brewer, has had some success, but in the context of the total number of jobs the state has lost, its impact has been limited.

The state lost 300,000 jobs during the downturn. During fiscal year 2012, the authority helped create 5,610 jobs, Brewer said.

"The loss of 300,000 jobs is devastating. There's no way to sugarcoat that, and I know that many Arizona families continue to struggle every day," Brewer said.

"But I also believe strongly that we've made the right decisions to turn this economy around and lay a foundation for job growth built not just upon housing," the governor said, adding the state has been "aggressive" about job creation.

Over the next five years, the authority aims to play a key role in creating 75,000 high-wage jobs in target industries like aerospace and defense, semiconductors, optics, bioscience and energy.

Some jobs in these sectors boast average wages between $63,000 and $104,000 and have a "multiplier" effect on the job market as suppliers hire workers to serve those industries, she added.

Other, more-established groups, such as the Greater Phoenix Economic Council, are also working to bring higher-wage jobs to Arizona.

"We still need to increase the personal income average of every citizen in Arizona," said Barry Broome, CEO of the council, adding that his group is focused on recruiting companies that export products.

This past fiscal year, the group says it assisted 36 companies that expanded or relocated to the Valley. Of those, 14 are set to bring jobs to the region that pay salaries of more than $40,000.

This year, GPEC brought in more than 4,000 jobs, Broome said. Of those, more than 1,300 are considered high-wage jobs, with an average salary of about $65,000.

That includes Silicon Valley Bank from California, which recently opened a branch in Tempe and is expected to hire 250 employees at an average salary of $88,000, Broome said.

As of March, the state had recovered roughly one-quarter of the jobs lost during the economic downturn.

Arizona leaders say it will take time to build economic momentum that can create more good-paying jobs that can make a difference in everyday Arizonans' paychecks.

"Attracting high-wage jobs is difficult -- not impossible -- but difficult," Broome said, adding that Arizona must be able to compete with surrounding states like Texas and Utah.

"We've made some recent policy achievements that definitely help," Broome said, "but more work is required of us."